Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/70746 
Year of Publication: 
2006
Series/Report no.: 
Working Paper No. 2006-25
Publisher: 
Federal Reserve Bank of Atlanta, Atlanta, GA
Abstract: 
A controversial aspect of payment cards has been the 'no-surcharge rule.' This rule, which is part of the contract between the card provider and a merchant, states that the merchant cannot charge a customer who pays by card more than a customer who pays by cash. In this paper we consider the design of an optimal card-based payment system when cash is available as an alternative means of payment. We find that a version of the no-surcharge rule emerges as a natural and advantageous feature of such a system.
Subjects: 
no surcharge
credit cards
payments
money
search
JEL: 
D83
E42
Document Type: 
Working Paper

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